The Senate Banking Committee will add Wall Street critic Elizabeth Warren (D-Mass.) and two other members to its team. AP Photo/Steven Senne

December 13, 2012

ADVERTISEMENT

"They frankly own the place." That's how Sen. Dick Durbin (D-Ill.), in a refreshing moment of candor, once described the banking industry's influence in Congress, a sad testament to the power deep pockets can buy. However, there is at least one incoming senator who has so far managed to avoid relying heavily on the financial industry's patronage: Elizabeth Warren, who in November defeated Republican Sen. Scott Brown of Massachusetts on the strength of a populist campaign against the country's biggest banks. She has been described as "Wall Street's worst nightmare," and bankers won't be waking up from that nightmare anytime soon: The Democratic leadership in the Senate has tapped Warren for a spot on the powerful Banking Committee, giving her a frontline position to continue her battle for greater financial regulation and accountability.

Ironically, Wall Street has only itself to blame for Warren's ascent. In the aftermath of the financial crisis, Warren championed the creation of a Consumer Financial Protection Bureau, which would eventually form a central plank of the regulatory overhaul known as the Dodd-Frank Act. She was seen as the top contender to lead the bureau, which would be charged with protecting customers from the types of predatory banking practices that ran rampant in the years before the crisis. However, President Obama declined to nominate her after it became clear that Congress, backed by Wall Street, would make a big stink over her nomination. Emerging from the disappointment as a liberal darling, she decided to run against Brown instead to win back the seat long held by Ted Kennedy.

So will Warren take it to the banks now that she's in a position of power? She certainly didn't shy away from that prospect on the campaign trail. "Wall Street CEOs — the same ones who wrecked our economy and destroyed millions of jobs — still strut around Congress, no shame, demanding favors, and acting like we should thank them," she thundered at the Democratic National Convention. And she is coming to the Senate at a crucial time, as the government begins actually implementing the rules that Dodd-Frank lays out. As Greg Sargent at The Washington Postsays, "If Warren’s candidacy served as a test of the political viability of a genuinely populist critique of Wall Street and a demand for real accountability and oversight, we will now see what her brand of populism looks like from a position of some influence inside the Senate itself."

However, Brian Montopoli at CBS News points out that "Warren will be near the bottom of the totem pole in terms of Senate seniority, which will limit what she will be able to accomplish legislatively." In that respect, she may have to take her cues from other Democrats, which means "a lot will depend on the larger tack Dems take in the next Senate," says Sargent. In addition, she will undoubtedly face opposition from Republicans and Democrats who may be reluctant to clamp down on the industry, which has complained bitterly about over-regulation. Still, given Warren's large public profile, it's clear that "congressional pressure on big banks will not subside," says Shanthi Bharatwaj at The Street.